Expo 2020: Win will boost UAE's real estate sector
Deutsche Bank report says $43bn needed to upgrade infrastructure
With Dubai winning the World Expo 2020 bid, the emirate requires approximately $43bn (47% of the estimated 2013 GDP) to significantly upgrade its infrastructure according to a research report by Deutsche Bank.
A bulk of this investment will go into expanding the hotel and leisure industry, while around $10bn will be spent to improve transportation infrastructure.
The biggest beneficiary should be the real estate sector, which has to cater to the increased demand for new hotel and infrastructure projects.
Deutsche Bank’s report continues to see positive momentum in the Dubai property market, triggered by attractive yields and property prices close to historical average. With Dubai hosting World Expo 2020, the sector should continue to attract strong investor interest.
Dubai property prices are currently up around 50% since Q3 2011 but still 45% below the peak of 2008 and close to the average price of the last eight years. Compared with other major cities in the world, Dubai offers attractive property prices and rental yields and a low tax environment. Moreover, the Emirate’s “safe-haven” status, strategic location and growing tourism sector continue to attract investor interest.
The Al Maktoum International Airport, the newly developed airport near the Expo site, started passenger operations on 27 October. When fully completed the airport will be able to handle 12m tons of cargo and 160m passengers annually, making it the largest international airport by some margin.
Besides this, Dubai has also initiated an expansion plan for its existing Dubai International Airport to increase its capacity from 60m to 90m passengers per year by 2018. Winning the Expo can further facilitate the “Dubai Vision” target of handling 20m tourist arrivals by 2020.
Increased tourist arrivals and an upbeat business climate are positives for the hotel and leisure industry as well as the retail sector. About 25m visitors are expected for the World Expo 2020 event, 71% of which will be non-domestic visitors.
Dubai was voted as the host city to conduct the World Expo 2020 event in the Bureau of International Expositions’ 154th General Assembly held on 27 November. The emirate was able to outbid the competition from Sao Paulo (Brazil), Ekaterinburg (Russia) and Izmir (Turkey).